Wednesday 23 March 2022

Shocked at the 5p Fuel cut?

Who could have predicted that?

As ever, the Government in their Spring Statement are happy to play the cynical nice guy, making a 5p cut in Fuel tax which actually still leaves them raising taxes over what they expected this year. 

Together with the very high levels of inflation, at over 6% now and heading for 10% as we can all see, is also the rise in NI to pay for the social care fund. yes, a small adjustment to NI thresholds will help the lower paid. 

But overall, this is a high level of financial repression. Let's not mess about, we are here at the start of the recession today. Never has there been this level of energy costs across the world without causing a recession, and that is before we factor in the cost of food thanks to the war in Ukraine too. 

Yes the government is worried about paying for the (ongoing) pandemic, but to raise tax and interest rates in the face of rapidly collapsing demand and confidence is idiocy. You can't tax your way out of this hole. the better strategy to to engender growth a bit faster than planned, with a more conducive environment for business. Unfortunately, the Tories are very lost here, we have high levels of business taxes, unreformed rates and constantly rising personal taxes. Mr Laffer has been long ago executed.

Rishi Sunak will regret this statement at leisure, it will be the thing that kills the Tory chances for an election or two. The fact they won't feel that today is ironic, the blows will come with the economic headwinds later in the year. 

29 comments:

djm said...

It matters not a jot whichever party is in notional power. The Global Public-Private Partnership will set the policy agenda as it exercises global governance. The UK Government, like others around the world, is the G3P's implementation and enforcement partner. It is the Government's role to convert the G3P policy agendas into hard policy and legislation at both the national and local level.......



https://www.ukcolumn.org/article/the-uk-new-normal-dictatorship

dearieme said...

It's all too late. They're going to lose the next election irrespective of what was announced, or not announced, today.

Even if he'd announced a stunning hyper-Thatcher approach - and there wasn't a cat in hell's chance of that - they're doomed. Their cock-ups over Covid guarantee it even though the Opposition's Covid policies were worse at every point over the last couple of years.

It's a funny business, a two-party system.

Don Cox said...

I will vote against Labour at the next election, as I always do. I'm probably not alone.

But I'm sure the abnormally large Tory majority caused by the Corbyn effect will be much reduced. As it should be -- a rump of numpties cannot be an effective opposition. I hope Starmer will find a few decent candidates.

Don Cox

Turnbull2000 said...

House prices are still doing well, so all is not lost for the Johnson/Sunak just yet. There are still plenty measures that can be taken to give the market a further boost ahead of the next election to see them through.

E-K said...

Turnbull - Won't take much now for house prices to take a tumble. There don't need to be anywhere near as many distressed sellers as there are home owners to cause a drop as prices are determined at the margin, where only the minority of houses are for sale.

----

You can't lock down economies for two years an not expect there to be recession. Putin has wrecked the Covid bounce.

It beats me how no-one was allowed to die of Covid but those very same vulnerables will be allowed to die of hypothermia for the sake of Greenism.

Anonymous said...

There are two budgets. What the government intends to spend; and what Boris intends to spend. The second one is unknown so Sunak has to increase tax as a hedge against his boss's urges.

They'll have to move soon to ensure they don't lose the election as I can't see the party wanting to spend any time in opposition.

Anonymous said...

On a more fundamental level, I volunteer for a charity and over the past few years we've been asked to bid for funding for "contracts". The "contracts" are to do the work for which the local councils or government have a statutory responsibility. So you have housing, benefits, food banks, DV, pension work all being done by the untrained. The authorities don't actually answer queries but just bounce them off to whichever local charity has the "contract".

You would think with so much government work being done by unpaid volunteers, that numbers and tax would go down, but it doesn't.

Then you turn to the language used by the government. If they intend to extort a little less from you each year, it is bigged up as a tax cut. If you intend to claim on the so-called National "Insurance" policy you are a "scrounger" or you get a lot less than was promised. It's the language you hear from DV cases - controlling behaviour.

All governments do this, but this particular one is corrupt to its core.

Anonymous said...

Too many people in this country see it as the governments job to manage every aspect of their life.

A woman gets raped and killed? Clearly it's the governments fault for not having tough enough laws against misogamy.

Price of food and fuel goes up? We need more hand outs from the government to help us pay for them.

So when so many want the government to always be doing something, and not willing to question whether that doing something is actually part of the problem, it's hardly a surprise we are where we are.

Sobers said...

It all feels rather 1989/90ish to me. The party is in full swing, but the adults have already taken away the punch bowl and the party atmosphere is running on the remaining bits of punch in people's glasses. Inflation hit just under double figures in 1990, after a classic over-heated UK economy hit the buffers of supply shortages and too much credit piling into property.

Ring any bells?

Anonymous said...

The new NI rise that applies to pensioners in work and dividends is now an additional type / layer of income tax on top of the existing employee NI, employer NI and income tax.
That Rishi has introduced this but then plans to reduce income tax rather than get rid of this embedding further complexity doesn't bode well.

Al

E-K said...

Sobers -More like 1984. Where Tesla people who renew their cars every three years tell me off for running an economy petrol one almost into its twenties.

It seems that the Iron Curtain has come down again... and we're the ones behind it !

The Russians have the gold, the useful metals and the gas... we've imaginary money and Woke.

We're the ones being oppressed under new ideologies which state that a man is a woman and woe betide anyone who says otherwise.

This is the fourth big regime change that the West has done and all of them have resulted in hundreds of thousands dead and millions of refugees heading towards Northern Europe.

Newspeak, never ending wars abroad, high tax and rationing "for your own good" and "some are more equal than others". It's all there.

Green taxes aren't to make you turn green. They are to force you not to have ANYTHING. For your own good, you see.

Charles said...

In 2010 I was 50. I was supposed to drive from San Francisco up the coast, visit Yosemite and Yellowstone, then turn south and hit various spots like the Grand Canyon, painted desert before flying home. 2008 finished that project. I am now retired sitting in Somerset and the current govt is unleashing a firestorm of inflation and incompetence to destroy my pension and retirement. Johnson is the most incompetent bluster fu*k I have ever met, and I have met him. Goodness knows this country has been plagued by leaders over blessed with self confidence and a mortal lack of integrity. The stupidity and gross waste of the last two years will have to be sorted out. My only hope is that Johnson is left bankrupt and dribbling in the gutter. It won’t happen he will find a cosy haven.

Anonymous said...

Price of food and fuel goes up? We need more hand outs from the government to help us pay for them.

Anon from 7:34 here.

Yesterday's first client starts "You gave my friend £300, how much am I going to get?" Seems that the word that our charity has free money to give away has got round, and there is a competition to see who can screw us for the most.

Went through the "guidance" and determined they could get £50 for fuel and £40 for their phone in the form of electronic vouchers. When the vouchers arrived, it appears they take them to the local shop and get cash for them in the hope it will be used for the purpose claimed.

This government have completely lost control of any fiscal discipline the party claimed to have. It's a complete and utter circus - and the population know it.

Don Cox said...

"This is the fourth big regime change that the West has done"

Can you list these four regime changes, so we know what you're talking about ?

What is your definition of a regime ?

Don

Elby the Beserk said...

Charles said...
In 2010 I was 50. I was supposed to drive from San Francisco up the coast, visit Yosemite and Yellowstone, then turn south and hit various spots like the Grand Canyon, painted desert before flying home. 2008 finished that project. I am now retired sitting in Somerset and the current govt is unleashing a firestorm of inflation and incompetence to destroy my pension and retirement. Johnson is the most incompetent bluster fu*k I have ever met, and I have met him. Goodness knows this country has been plagued by leaders over blessed with self confidence and a mortal lack of integrity. The stupidity and gross waste of the last two years will have to be sorted out. My only hope is that Johnson is left bankrupt and dribbling in the gutter. It won’t happen he will find a cosy haven.
=====================================================

"I am now retired sitting in Somerset and the current govt is unleashing a firestorm of inflation and incompetence to destroy my pension and retirement"

At least you are not alone. That applies to me exactly. And one easy way they could have helped such as us would have been to raise the tax threshold which has been static for 6 or so years; as it stands, the state pension and a small annuity, hardly enough to survive on as it is, are taxed.

Johnson can rot in hell.

Elby the Beserk said...

And just like that ....

https://www.conservativewoman.co.uk/how-pensioners-are-defrauded-by-the-state/

Anonymous said...

According to some economists, inflation is good. If your living standard drops due to inflation, then you have less money to spend. With less money, companies have to drop prices to get your business - hence inflation reduces inflation (simples)

On the other hand, you could always vote in someone with some competence but it looks a bit difficult at the moment.

E-K said...

Elby... I did say during the pandemic and lockdowns... The old are going to wish they hadn't survived.

E-K said...

Anonymous @ 11.46

The prices don't come down. The goods go elsewhere towards sound money.

Don Cox said...

At 4.45pm today, Britain's energy came 4% from wind and 53% from gas.

Don Cox

Anonymous said...

Yeah!
Go wind!

Elby the Beserk said...

Wind. Odd that the Green Totalitarians refuse to note that wind speeds in Europe have been decreasing for some time.

https://www.qwant.com/?q=wind+speed+europe+decrease&client=brz-brave&t=web

https://theconversation.com/what-europes-exceptionally-low-winds-mean-for-the-future-energy-grid-170135

"Through summer and early autumn 2021, Europe experienced a long period of dry conditions and low wind speeds. The beautifully bright and still weather may have been a welcome reason to hold off reaching for our winter coats, but the lack of wind can be a serious issue when we consider where our electricity might be coming from.

To meet climate mitigation targets, such as those to be discussed at the upcoming COP26 event in Glasgow, power systems are having to rapidly change from relying on fossil fuel generation to renewables such as wind, solar and hydropower. This change makes our energy systems increasingly sensitive to weather and climate variability and the possible effects of climate change.

That period of still weather badly affected wind generation. For instance, UK-based power company SSE stated that its renewable assets produced 32% less power than expected. Although this may appear initially alarming, given the UK government’s plans to become a world leader in wind energy, wind farm developers are aware these low wind “events” are possible, and understanding their impact has become a hot topic in energy-meteorology research."

If there is ONE word I could use to address the utter nonsense of "renewable energy" it has to be

HUBRIS.

dearieme said...

@EtheB: The lights will go out.

Horribly
Useless
Buggers
Remove
Illumination
Security

Anonymous said...

4% of the electric, total energy is a lot more gas

E-K said...

The only people I'm trusting at the moment are Peter Hitchens and Russell Brand.

andrew said...

Competant leaders...
... the undenaible benefit of brexit is that the price of incompetant leadership becomes clear as they cannot blame the eu anymore. Saying 'its a world problem' just doesnt connect in the same way.

Shuffling tokens of exchange from the rich or future generations to the current poor do not help the current poor to be less poor.

That can only be done my helping them to earn more.

Boring but things that will raise the UK's growth rate.

A mass rapid public transport system (getting people to the right job fast - one of the main reasons london is more productive than birmingham)

Skills training at all ages

Chraper houses (mobility)

Anonymous said...

Shuffling tokens of exchange from the rich or future generations to the current poor do not help the current poor to be less poor.

Our charity has become a revolving door for the working poor, those in a job but not able to pay rents which are increasing. We've also had the poor poor, those with chaotic lifestyles or long term health issues, but we are now seeing pensioners coming in.

If you have worked all your life, saved and planned for a rainy day, you now find that it was not enough. And it is not just world events, it is the absolute waste of this government with their flip-flop from one headline chasing decision to another.

Never seen such a concentration of the incompetent in one place.

Matt said...

Anonymous @ 6:27 am

Who voted for the clowns in Westminster? The electorate are to blame for the sorry state of politics. In many cases they vote for the donkey who promises them the most money. Of course, the state (not just the politicians) don't deliver on those promises but they are not punished for the total lack of performance.

An average earner will pay around £9k in tax & NI (including employers contributions) per annum but the average government spend is £9.5k per person. So we're spending more (on average) than people pay in. This is where the fallacy of "I paid in all my working life" comes from - you've taken more than you contributed.

E-K said...

Matt

Those working tend to take a lot less than average out of the system. Also the above average earners are paying a lot more than average in.

That 9.5% you mention gets spent per head on ALL persons, not just those earning.

So "I've paid in all my working life" still applies. Someone else has taken more than they've contributed, being the problem.